Furniture Brands International announced its financial results for the first quarter ended March 31, 2011.
- Sales for the first quarter of 2011 were $297.9 million, a decrease of 7.6% versus the first quarter of last year and an increase of 7.9% from the prior quarter
- Gross margin was 26.0%, roughly flat to last year's 26.2%, and SG&A was $79.6 million, also relatively flat to last year's $79.9 million
- Quarter end cash balance was $40.8 million, and borrowing availability increased by $33 million to a total availability currently estimated at $51.5 million, reflecting the refinancing of our asset-based loan facility
Net sales of $297.9 million for the first quarter of 2011 declined 7.6% versus net sales of $322.4 million in the first quarter of 2010. On a sequential basis net sales increased 7.9% from the fourth quarter of 2010. First quarter 2011 retail sales at the 65 company-owned stores and showrooms totaled $39.0 million compared with first quarter 2010 sales of $35.6 million at 72 stores and showrooms. First quarter 2011 same-store sales at the 46 Thomasville stores that the company has owned for more than 15 months showed an increase of 17% from the first quarter of 2010, the 5th consecutive quarter of double-digit same-store sales increases.
"Our monthly sales trend improved each month as we progressed through the quarter," said Mr. Ralph Scozzafava, Chairman and CEO. "Our newer product introductions are being received positively in the marketplace as we secure added distribution at retail and consumers respond favorably to our tested product and brand building initiatives."
Furniture Brands' gross margin for the first quarter of 2011 was 26.0% compared with 26.2% in the first quarter of 2010. Selling, general and administrative expenses (SG&A) for the first quarter of 2011 totaled $79.6 million, essentially flat with the $79.9 million reported in the first quarter of 2010.
The Company reported an operating loss of $2.1 million in the first quarter of 2011 as compared to an operating profit of $4.6 million in the first quarter of 2010. For the first quarter of 2011, Furniture Brands reported a net loss of $3.1 million, or $0.06 per diluted share, compared to net income of $3.5 million, or $0.07 per diluted share, in the first quarter of 2010.
"We remain focused on controlling costs, while prudently investing in profitably growing our business, and increasing the efficiency of our manufacturing and sourcing operations," Mr. Scozzafava said. "The cost discipline that has driven the improvement in our expense structure the last few years remains ingrained within the organization, and is helping fund the increases in brand building investments, that are beginning to yield the intended results," he added.
Mr. Scozzafava further noted, "We remain on track for the completion of our Indonesian manufacturing plant expansion by the third quarter of this year. In addition, in the last week of March, our Mexico cut and sew operation shipped its first container, well ahead of schedule. As these two projects ramp up to their full potential, we expect to achieve annual pre-tax savings of $10 to $12 million in 2014."
In a recent post-quarter development, the Company refinanced its secured asset-based revolving credit facility on April 27, 2011. The new $250 million amended and restated facility has a five-year term and is secured by the Company's accounts receivable, inventory and cash. It has increased borrowing availability by $33 million versus the former facility to a total availability currently estimated at $51.5 million, and the current interest rate is LIBOR plus 2.75% (additional information is available in a recently filed Form 8-K).
"The refinancing, right-sizing and extension of our asset-based loan in advance of its 2012 maturity was just the right thing to do in the current improved credit environment," Mr. Scozzafava said. "The new facility gives us significantly more current borrowing capacity, as well as sufficient funding for the future, with a manageable increase in cost," he pointed out.
About Furniture Brands: Furniture Brands International (NYSE:FBN - News) is a global operating company that is one of the nation's leading designers, manufacturers, and retailers of home furnishings. It markets through a wide range of retail channels, from mass merchant stores to single-brand and independent dealers to specialized interior designers. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Broyhill, Lane, Thomasville, Drexel Heritage, Henredon, Pearson, Hickory Chair, Laneventure, Maitland-Smith, and Creative Interiors.